BNNY - Annie’s Continues to Power Forward

Last night after the close BNNY reported its fiscal Q2 2014 results: the top and bottom lines saw strong sequential and year-over-year growth while gross margin was pressured and frozen pizza results were weaker.

Despite slightly uneven quarterly results we remain bullish on the company as its 2H outlook stands to benefit from product roll-out, and COGS and SG&A efficiencies, including from its acquisition of Safeway’s manufacturing plant (announced 3 days ago) in Joplin, Missouri, where the company has been producing over 50% of its snacks business since inception in 2002. The purchase price is $6M, plus the cost of inventory and supplies at the close – it is expected to be an all cash transaction.

From a quantitative set-up, our levels below show the price of the stock comfortably trading above our immediate term TRADE and intermediate term TREND support levels. We remain buyers of the stock on weakness, however today wasn’t that day with the stock up intraday over +5%!

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